12.04.202115:33 Forex Analysis & Reviews: GBP/USD: plan for the US session on April 12 (analysis of morning trades)

To open long positions on GBP/USD, you need to:

In my morning forecast, I focused on the level of 1.3711 and recommended that you make decisions on entering the market from it. Let's take a look at the 5-minute chart and figure out what happened. In the first half of the day, the bears formed an excellent false break at the level of 1.3711, which led to the formation of a sell signal for the pound. Unfortunately, the downward movement did not take place, and after a short pause, the bulls broke above 1.3711, taking down all the stop orders. But it didn't end there. Immediately after that, a reverse test of this level took place, which led to the formation of a signal to open long positions in the continuation of the upward trend. After some time, the pair tested the target of 1.3741. It was not possible to wait for good sales to rebound from this range, as the market continued to be under the control of buyers of the pound.

The bulls coped with the morning task perfectly and did not let the pair fall below the support of 1.3670. Given that the market is on the side of buyers, the focus in the second half of the day will be shifted to the resistance of 1.3770, on the breakdown of which the further upward correction depends. A breakout and consolidation at this level with a reverse test from top to bottom will form an additional entry point into long positions, which will open a direct road to the maximum of 1.3825, where I recommend taking the profits. In the case of a decline in GBP/USD in the second half of the day, the support area will be 1.3734, where the formation of a false breakout will lead to the formation of a good entry point into long positions in the expectation of continuing the upward trend. If there is no activity in the area of 1.3734, the pressure on the pair will return: in this scenario, it is best to postpone purchases until the test of a larger minimum of 1.3705 and open long positions immediately for a rebound in the expectation of an upward correction of 25-30 points within the day.

To open short positions on GBP/USD, you need to:

Sellers did not cope with their task for the first half of the day and now they need to think about how to keep the pound above 1.3770. The optimal scenario will be short positions, provided that a false breakout is formed in the area of this resistance. If there is no bear activity there, I recommend opening short positions immediately for a rebound only from the larger resistance of 1.3825, counting on a correction of 20-25 points within the day. An important task for sellers is to return and consolidate below the level of 1.3734. Only the reverse test of this area from the bottom up forms an entry point into short positions to reduce the GBP/USD to a new low of 1.3705, where I recommend taking the profits. A more distant target will be the support of 1.3670.

Let me remind you that in the COT reports (Commitment of Traders) for March 30, a reduction in both long and short positions was recorded, while the total non-commercial net position increased. The bulls were active last week with every approach of the pound to large support levels, which led to such confusion in the market. The data that was released on the UK economy allowed us to build a new upward correction for the pound, even if only in the short term. Among investors and economists, confidence continues to grow that the UK economic recovery is gaining quite a good momentum, which will support the British pound in the summer of this year, as disagreements increase in the Bank of England over how the economy will develop further and when to respond to all this. Those who expect to buy the pound should take a closer look at the market. Thus, long non-commercial positions declined from 51,843 to 47,222. At the same time, the short non-profit fell 30,024 to 22,263, indicating a major revision of forces in the market in the near future. As a result, the non-profit net position rose to 29,959 from 21,819 a week earlier. The weekly closing price fell to 1.3774 from 1.3859.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily averages, which indicates an attempt by buyers of the pound to return to the market.

Note: The period and prices of the moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

A break of the upper limit of the indicator in the area of 1.3765 will lead to a new wave of growth of the pound. If the pair falls, the average border of the indicator around 1.3705 will provide support.

Description of indicators

• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
• MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-profit speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions represent the total long open position of non-commercial traders.
• Short non-commercial positions represent the total short open position of non-commercial traders.
• Total non-commercial net position is the difference between the short and long positions of non-commercial traders.